Category Archives: Financial

So I’ve never done this, but think it’ll be fun. I wanna try to predict the future 3 – 5 years from now!

In 3-5 years we can come back to this post and either congratulate me or make fun me! I also wanna just self-think what investments I should make, what technologies I should keep an eye on, or what trends to hop on.

Whilst completely impossible to predict the future, I think with current knowledge a 5 year prediction is about the absolute limit.

I remember 5 years after the first iPhone came out there’s NO way most people could’ve predicted what revolution that caused (every person on the planet would soon be carrying an internet-connected supercomputer in their pocket).

So let’s get started predicting!

OVERALL ECONOMIC PREDICTIONS FOR 3-5 YEARS:

Things through 2014 kicked ass, but I seriously doubt this trend will continue for numerous reasons. I think the cracks which will cause another downturn will start to show in 2015, and continue a downward trend for a year or two after that. I feel like at least part of 2016 will start seeing a bunch of “the world is ending” type news.

The good news is, when things are bad, everything is on sale!!Houses! Stocks! Everything!

“Be fearful when everyone is greedy, and greedy when everyone is fearful.”

–Warren Buffett

HOUSING PREDICTIONS:

Right now I live smack-dab-in-the-middle of downtown Austin, which is growing at one helluva rate. And the growth is justified, as tons of big-ass companies start moving in major campuses here, which in turn is driving about 150 to 200+ young and highly paid people to move here every day.

The overall trend across the entire world is thatpeople want to live in urban centers if they can, but at some point it gets too expensive and difficult, so they either move to a suburb or to a small place.

Thus, mid-sized cities like Austin have continued to grow at a huge rate because it’s a cool city, there’s water all over the place, the taxes are low, jobs are plentiful, it’s pretty, the weather is good, and you can overall live a super high quality of life for a reasonable amount of money.

Sure I can buy an expensive house on the lake in Austin for $5,000,000……but I can ALSO buy a reasonable 3-bedroom family home with a front & back yard for less than $200,000 if I go just 15 minutes outside of downtown.

That last part is why cities like Durham, Boulder, Portland etc are growing so fast. You can actually like a great life when you’re young, then have kids out in the suburbs. Your long-term plans can be secure in a smaller city like Austin. Whereas trying to settle down in New York or London is way more of a “difficult” deal.

However, A LOT of people are suddenly realizing “The American Dream” because housing prices are so crazy. This is primarily due to interests rates being STUPIDLY LOW. Like 4% or less. Meaning buying a $300,000+ home is pretty affordable for most people right now!

Meaning shit-tons of property is being sold.

Every single Tom Dick and Harry I know (I’ve always wanted to use that phrase!)….is either buying a house or becoming a real estate agent. This is a starting sign of a small bubble. It doesn’t mean it’ll collapse, but it will correct at some point.

A the real estate prices and rents have hockey-pucked uwards in the last two years.

Whilst my overall longterm (10+ years) view of Austin and other cities is upwards, I think the short term (3 years) will see a reasonable decline in housing prices.

I SERIOUSLY DOUBT IT WILL BE IN IMPLOSION…..but it will be a “coming back down to Earth” as soon as the interest rates start going up.

Almost everyone follows this simple rule when buying a house:

If [Rent] > [Mortgage] = Buy house.

And when interest rates are super low, then of course it drives people to buy houses. And I’ve seen a lot of people buy houses they could not afford.

Also there’s a trend in downtown urban areas where the rents are skyrocketing, but will likely STAY in that region and not deflate a huge amount.

It’s because younger people want to live downtown, and would rather spend 50% or more of their income to live in a sweet-ass place downtown than spend only 20% of their income on rent, but then have to buy a car or commute every day.

I actually sort of agree with this (to an extent). I think your quality of life is higher if your workplace is closer.

Also let’s factor in the AirBnB’ization of apartments. If you live downtown and can sneak in a few rental days per month on your place, you could bring in some serious extra money, maybe offsetting the amount of money you’re spending on rent.

tl;dr: Interest rates at some point will go up, causing housing growth to slow. Urban rents will still be expensive.

FUTURE TRENDS PREDICTIONS:

So here’s some thoughts about future trends I see coming, all of which I’m excited about.

I believe in the coming 5 years these changes won’t necessarily DESTROY any industries, but instead will drastically the shift power to different companies.

ELECTRIC CARS PREDICTIONS:

Electric cars will hit an inflection point soon where every car manufacturer will seriously start going electric (at least they better get on it lest they get left behind).

By the time I have kids and they grow up I’m sure they will rarely ride in a gasoline powered car.

Who would want to???

Already the best car in the world right now is an electric car (Tesla P85D).

Electric cars are getting massively cheaper, and a 7-seater electric family sedan can already outrun any Lamborghini on the road off the starting line, electric cars are more spacious, and they are far more simple (the average Tesla has just 25 moving parts).

The benefits of a good electric car make it SO much more appealing than a gasoline car in every single possible way that it’s almost CRAZY to think in ten years someone would want to buy a gasoline car for any other reason than price (side note: I predict gasoline cars will get super-damn cheap).

Basically as these things happen, the delta increase of electric cars will take a rapid rise:

The price of an electric vehicle equivalent to a Toyota Camry gets to around $35,000 or under.

My money is on: Tesla Motors (TSLA). Not to mention they will soon control more than 80% of all worldwide battery pack production. Can’t make no electric car without no battery pack!

A special word about my thoughts on Tesla Motors: Aside from having a small man-crush on CEO Elon Musk, I think the “moat” around Tesla Motors is so big, and undeniably growing larger:

The Tesla Gigafactory will output more L.I. batteries than ALL THE CURRENT L.I. BATTERY PRODUCTION ON THE ENTIRE PLANET. (this is a super important factor to keep in mind).

Much like Apple did with certain types of processors and super-strength glass, Tesla will likely have a stranglehold on MOST of the supply of all the materials required. Since Tesla will be the worlds largest buyer of these materials, this lowers their price and puts a huge strain on other manufacturers to get materials.

In electric cars, the software within the car is almost as important (if not MORE important) than the hardware. Since Tesla is a hardcore software engineering firm as well as hardware, it has a MASSIVE advantage over the incumbent car companies.

Tesla is most likely to first introduce an SDK and API to their cars (and get the most developers on it). With a car that’s able to be customized in any way (much like an iPhone can be customized with apps to each user), the possibilities are awesome! Especially since developers will be able to work with a car that’s fully controlled by software and has autonomous driving capability built right in. The cool new thing will be “apps for your car” at some point in the next few years. But they can be far more useful than simple apps on your phone.

Also as electric infrastructure improves, I also think Tesla’s battery business will boom.

If you think about:

Nearly EVERY SINGLE PERSON ON THIS PLANET carries around a high-capacity Lithium Ion battery right in their pocket (aka your phone). So batteries are already big business.

But BIG batteries are not super common yet because they are expensive. But as economies of scale happen (Gigafactory as a start), and the natural progression of energy density increases (something like 8% per year compounded), damn-near everything will be better off powered by a battery than traditional fuel sources.

I think dependency on fossil fuels will remain for quite some time…..however electric has started it’s timid and initial ascent. Gas-powered car companies should take a STRONG note.

Once again, my money is on Tesla Motors (TSLA).

MEDIA PREDICTIONS:

Basically all traditional media will continue its transition into the internet.

Cable TV will slowly more-and-more get absorbed by internet services like Netflix, Hulu, YouTube, Amazon etc. When live sports start high-quality live streaming through the internet, the cable companies are SCREWED.

YouTube (and similar services) are going to absolutely decimate the traditional television industry. Like literally decimate it to shit.

YouTube will go on an even further rise when it gets CURATION down to a science. Currently winding down with TV is still better because it’s a mindless activity that requires no effort.

With site like YouTube and Netflix you’ve gotta constantly think which videos to watch which is annoying and hard. This function is already getting better…and will get REALLY good in the next 3-5 years.

Already Hulu kind of has an interesting way of showing you stuff it thinks you’ll like without having to push a button.

Also as the screen in your pocket gets better (your phone), you’ll need a traditional TV less and less.

If YouTube (or Hulu or NetFlix) starts streaming live sports games, it’s the nail-in-the-coffin for TV. It’s seriously over for them.

Already for younger generations, they can identify FAR MORE YouTube celebrities than traditional TV & Movie celebrities. This trend will accelerate. The dollars will follow (correction….they’re ALREADY following).

Basically advertising dollars flow to where the viewers are. This means more and more dollars will start going to Google properties, Facebook, Instagram, SnapChat….or whatever the hell else will come out in 5 years (almost impossible to tell) that keeps people’s eyeballs glued.

However I think YouTube is going to be a dominant player here. Big time.

So where will a lot of advertising dollars and distribution go?Placing my money on: Google (GOOG).

Side note: Amazon is doing some interesting things in this space, and are getting aggressive. I think they have a legitimate shot at becoming a major player in digital content delivery like movies and TV.

BOOKS AND READING PREDICTIONS:

Traditional books are going to be less of a thing. 100 years ago all you could do was read.

Now we can all watch video, browse internet, listen to audio, play video games etc….basically the “brain share” dominance that books enjoyed for hundreds of years has some SERIOUSLY STRONG competition.

But I see this as good (well, sorta)!!

Books are slow as teaching tools for certain people (and subjects). Video (or in a few years, virtual reality) can drastically increase the amount of information conveyed to your brain in a certain amount of time.

My money on books is obviously on Amazon (AMZN). No one else remotely has the distribution they do.

VIRTUAL REALITY PREDICTIONS:

I’m not sure VR (virtual reality) headsets will become super common in the next 3 years, although I DEFINITELY think they will start taking over in some form in the next 10 years.

It will soon become a new medium which will give some stiff competition to traditional TV. Already VR headsets like the Oculus Rift provide an insanely immersive experience that far dwarfs anything a TV could give you.

Now we’re just waiting for a more useable-in-the-real-world-device and more content suited to a VR environment.

The advent of Oculus Rift has done what the Tesla Model S did for electric cars. It proved it CAN in fact be a mainstream product that kicks ass, and is not a gimmick.

And it looks like VR will be the next modality in which people enter their own world:

In the 1990’s – People would plug in headphones and listen to music to be in “their own little world.”

In the 2010’s – People would plug in headphones and watch their little screen to be “in their own little world.”

In the 2020’s – People will put on a fully-immersive VR mask to be “in their own little world.” This is ALREADY HAPPENING! The devices will of course become WAY smaller than they currently are, and probably allow for outside interaction. Like some sort of Google Glass and Oculus Rift hybrid type thing that looks like a regular pair of hipster glasses.

The cool thing about this level of technology, is that it co-exists with an internet that EVERYONE is connected to.

So you no longer have to be in “your own little world”, but instead you can actually JOIN other worlds that are geographically far away from you!

However there’s a ways to go in the hardware development of VR before it goes mainstream. But with processors shrinking and the hardware already getting REALLY good, it’s time is coming in the next ten years.

I imagine the best virtual reality headset will be as non-invasive as a pair of glasses, yet as immersive as a full Oculus Rift headset. If this is attained (and it already has been, albeit poorly), we’ll start seeing all sorts of real-world virtual reality overlay which will be AWESOME!

Imagine walking into a party, and over everyone’s head you can see their stats, who they are, who they work for, if they’re single……or if at work you design products completely through your VR lenses rather than on a computer. The possibilities for social and work implications are awesome. Although I’m sure the first heavy users will be gamers. Because games in full VR will be pretty bad ass.

Imagine how addicted people are to certain immersive games like World of Warcraft…..when a fully-immersed version is introduced, you can imagine how much more addictive and exciting they will become!

I bet 10-15 years from now there will be this Matrix-like conundrum where a lot of people will vastly prefer their virtual worlds over their physical worlds (I’m looking at YOU Japan).

My money is on: I dunno enough to make an educated guess. However I imagine some gaming company would blossom from this technology, as a virtual world would be the coolest to explore in VR.

3D PRINTING PREDICTIONS:

I’ve even printed out cool stuff like a prosthetic hand and 3D printed chess set!

However, I will say with great certainty: In 5 years I’m gonna look back at this 3D printer and laugh at what a piece of shit it is!!!

This machine is dumb as hell.

It’s basically a glorified glue-gun. All it does is heats up plastic and spits it out a tube (which happens to be on a 3D axis). It’s dumb technology that’s existed forever.

It’s just that only recently the software and hardware has been cheap enough to be accessed by regular consumers like me (I initially bought my MakerBot for $2,700 which is still too expensive).

HOWEVER….the fact that I can now cheaply (and non-messily) print out useful objects in the confines of my apartment is incredibly game-changing.

Me and my brother even printed out several different types of wind turbines which just 5 years ago would have been impossible to manufacture in an apartment…….and we did it with ZERO skill, in less than 2 hours, and for a materials cost of less than $0.05. WOW.

Currently this 3D printer is one stupid-ass machine, but the new technologies that are coming out will be able to print multiple materials quickly, and at the near-micron levels of accuracy.

This means you’ll be able to print out intricate objects (and soon circuitry) for minuscule prices.

Right now for less than $1,000 you can print out objects that can be made by a skilled wood lathe operator or laser cutter.

However in 5 years you’ll be able to make devices than normally would take a small manufacturing facility with industrial equipment.

If a printer in the next 5 years can cheaply/quickly print the equivalent of basic circuitry, multiple materials, and moving parts…..the influx of 3D printers will rise dramatically.

Currently the technology isn’t totally mainstream to average consumers, but already it’s implications in the heavy industrial world are profound:

New products are instantly 3D modeled and iterated on.

GE is developing proprietary-only printing methods to start printing out their turbines.

The most advances turbine and engine additions on the market are now 3D printed, because traditional mold-manufacturing methods simply cannot replicate the intricate insides and strength of these pieces. That’s insane.

3D printers will very quickly replace much of the custom manufacturing done by traditional production methods.

3D modeling for industrial purposes has been a round for years…..but now those people designing the models can damn-near instantly print out real-world-working versions of their models!

This turns a single lowly designer into a manufacturing powerhouse without the need for an expensive manufacturing facility!!

3D printing is now where computers were in the 1980’s. And since the rate of advancement in that field is so rapid, it will NOT take 30 years to develop like computers.

My longterm bet is placed on: Stratsys (SSYS).

BITCOIN AND CRYPTOGRAPHIC CURRENCY PREDICTIONS:

I dunno which of the crptyo-currencies will win, but it doesn’t matter. BitCoin has already proved (in it’s infancy stages) that the concept works great, and works BETTER than the current financial system in certain ways!

The inflection points of BitCoin will be:

When a country like Russia or Greece totally fucks up their currency and more and more citizens see their wealth completely evaporate. These economies will notice that there is an easier and un-alterable currency like BitCoin in which they can safely transact without worrying their purchasing power will evaporate.

The more people accept it, the more “value” it has. Already Overstock, Amazon and lots of other places are accepting. This is no different than other currencies around the world. It’s just as “fake” or “real” as every fiat currency.

If the United States Dollar (the worlds reserve currency) goes all bat-shit crazy again like it did in 2008, (and probably will between 2015 and 2017), then BitCoin will get a MASSIVE leveraged boost because people are fearful of the dollar deflating even more (ummm….which they totally SHOULD be fearful of).

If the above items happen, more and more BitCoin technologies will emerge that will make it SUPER DAMN EASY to transact in BitCoins. For example, I truly think it’ll be easier to give & receive BitCoins through your phone pretty soon than any other currency out there….and with no transaction fees.

HOWEVER I think the more exciting part of BitCoin hasn’t even started yet!! Here’s why:

Currently financial transactions are usually above $1 because it costs too much money to accept anything less.

The Apple iTunes store was really the first to start accepting credit card charges for $0.99, but that’s the lowest it can go.

With BitCoin you’re able to transfer money down to about $0.00000001 with zero transaction cost! THIS CAN LITERALLY CREATE AN ENTIRE NEW ECONOMY of micro-micro-micro payments.

Now I think the adoption of this depends on BitCoin first becoming relatively mainstream, but it can transform how business is done.

You could potentially pay every content creator on the net a litttttlleee bit of money for viewing their material.

You could use a companies services and only pay them $0.0002 for the small service you used.

I don’t know exactly how this will pan out, but micro-payment WILL become more of a thing as BitCoin (or other similar currencies) are used.

The micro-payment structure will most likely start in the gaming world where micro payments (of $0.99) already exist. But it’ll start to go micro-micro-micro with BitCoin.

My money is placed on: BitCoin. I’m not buying them as an investment per se as the market for them is in such infancy that it’ll be hard to predict….but at the time of this writing I own 6.19 BitCoin which I bought for a cost-average of about $225/each.

You can probably tell how all of these things either improve my life, improve my knowledge, or improve my effectiveness as a business person.

AND I REFUSE TO HEM-AND-HAW ABOUT THESE PURCHASES.

My brain is the most important tool in my shed, and anything to improve it can pay off massively. So to have funds available for all these things……I have been thankful for the last 10+ years to have had “an investment account” to pay for it all without thinking.

Do YOU have an account like this?
Do YOU have some funds dedicated solely to the improvement of your brain?

Sincerely,
Neville Medhora – A kopywriter with thousands of dollars to “make it rain, on my brain.”

FYI. There are only 19 NevBox’s left this morning! If you would like to grab one, I’d suggest you do it in the next few minutes. The PayPal button will automatically stop working after the last one is sold.

Here’s a question I’ve been getting more and more geared towards my business House Of Rave:

Have your sales gone down in the poor economy?

It’s actually a fantastic question and relatively interesting to hear different answers from different business owners.

So, have your sales gone down in the poor economy?

MY ANSWER:YES…..but not in the traditional sense. Let me explain:

Most people expect that sales simply stopped coming in after the economic downturn, this hasn’t been true even though House Of Rave sells things people buy only on disposable income. In fact, if you never told me there was a “recession” going on, I probably wouldn’t have noticed too much….people still order all the time (although I’ve seen a very significant drop in big orders from large corporations).

The MAIN problem I’ve had which takes a DIRECT shot at lowering my sales is all the cool products are out of stock. Almost all of my previous best sellers are no longer being manufactured.

HouseOfRave sells “hard to find” and “unique” products….which often means “they don’t sell it in big stores”. This has been great so far, but a problem I’m seeing now is manufacturers are on tight budgets and don’t have the capital required to mass produce slower selling items. I may be able to sell 10 per day of an item, but a manufacturer might need to sell 10,000 of them per day to keep cash flow moving.

This has been the predominate way that my business has been affected. The cool part is, with more marketing and more effort I’ve been able to maintain and grow both the profit and sales of the business, but it’s required more effort than in the past (keep in mind I used to put NO effort into it at all). Before, I would just slap products on the site and they sold….it doesn’t seem to be quite as easy anymore.

Many smaller manufacturers and product patent holders are going out of business now. Think about it, to manufacture just ONE simple product you must spend hundreds of thousands of dollars for materials and labor, store them, then find people to buy them. Before you make even one CENT from the product, you could blow through a half-million dollars on credit. If the product is a flop (note the importance of beforehand PRODUCT RESEARCH) you’re screwed…..and I’m just using the example of small-scale manufacturing of novelty products.

While my business doesn’t have the extreme overhead of these manufacturers, I feel their pain indirectly when a cool product of theirs goes out of stock.

IN 2009 THERE WERE….——————————-154,458 Unique visitors to NevBlog according to Google Analytics.442,307 Unique visitors to NevBlog according to Plesk Stats on my server.84 Number of posts on NevBlog5 Days spent homeless.11,453 Miles put on my car.87 Gigs of bandwith transferred to HouseOfRave customers.377,176 Unique visitors to House Of Rave according to Google Analytics.722,329 Unique visitors to House Of Rave according to Plesk Stats on my server.$35,244 Amount of money I spent to live.54 Times I rode the Cal Train$1,892 Money spent on iPhone service.1 Time I almost bashed my face in doing back flips on videotape.

When the economy sucks, the government will generally lower interest rates so it’s more enticing for you to SPEND money rather than SAVE.

Well they’ve done that big time right now, and I did a little sleuthing around at some of my non-risk-bearing accounts.

Example:

About 5 years ago I set up an Emigrant Direct account because internet banks usually offer higher interest rates than most traditional banks…and I’ve pretty much forgotten about it.

I stashed away about $25,000 in that account and checked it recently to be greeted with:

1.2% annual return??? HAHAHAH!!

This means my roughly $25,000 will earn $300 for a whole year of sitting there. Meanwhile the inflation rate right now is “officially” between 3-4%….and in reality is probably much higher.

So while I earn $300, my money loses $750 in value (at least). The account is no longer a “No risk” account…it’s now a money pit.

Well that’s a losing proposition, so while I already have an investment account I use to throw into businesses that make me money, it looks like I’ll be almost forced to put some of that money to good use.

However with all the current tax breaks encouraging businesses to spend right now, taking money out of permanent savings accounts and spending them on money-making endeavors seems a smart idea right now.

A little while back I figured it costs me $24,160 to be alive each year based on my 2007 spending totals. That number was for the basic neccessities, but for some reason I never tallied the actual amount I spent in 2007.

This post will actually be the first time I’ve really tracked what I personally spent for the year. I’m very good at keeping a tight track of everything I spend for the month, so these numbers are quite accurate.

I often pay bills like car insurance, health insurance or gym memberships 6-12 months in advance, so the numbers vary quite a bit sometime from month-to-month. There’s also zero debt on my books, so these numbers are not inflated by credit card payments, car notes or anything like that. These also don’t include business spending (those numbers get more fun)!

In the post which calculated $24,160 in living expenses, I stated, “That’s just to live, doesn’t even account for going out, travelling etc.”

The total discrepancy between the estimate and actual number is less than $6,000 for the whole year, and since I know I spent more than $6,000 going out and travelling for the whole year, that means I’ve been good at keeping my monthly costs low.

Here’s a fun game for younger people to play: (I would hope all older people already have this figured out):1.) Tally last years total expenses.What does it come to? That number = EXPENSES

2.) Now suppose for a moment you lost all your current income sources.

3.) Do you have at least enough money to cover EXPENSES for the next 12 months?

If yes; good.If no; that’s your business.

I’d like to see a comparison of Noah’s monthly expenses from the time he was in the SF Bay Area compared to living in Austin now.